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Question
Calculate Revenue from operations of BN Ltd. From the following information:
| Current assets | ₹ 8,00,000. |
| Quick ratio is | 1.5: 1 |
| Current ratio is | 2: 1 |
| Inventory turnover ratio is | 6 times. |
Goods were sold at a profit of 25% on cost.
Solution
Gross Profit = Revenue from Operations – Cost of Goods Sold
Current Assets = ₹ 8,00,000
Current Ratio = `"Current Assets"/"Current Liabilties"`
`2/1 = (8,00,000)/ "Current Liabilities"`
Current Liabilities = `(8,00,000)/2` = ₹ 4,00,000
Quick Ratio = `"Quick Assets"/"Current Liabilities"`
`1.5/1 = "Quick Assets"/(4,00,000)`
Quick Assets = ₹ 6,00,000
Stock = Current Assets – Quick Assets
= ₹ (8,00,000 – 6,00,000) = ₹ 2,00,000
Inventory turnover Ratio = `"Cost of Goods Sold"/"Average Stock"`
`6 = "Cost of Goods Sold"/(2,00,000)`
Cost of Goods Sold = 6 × 2,00,000 = ₹ 12,00,000
Gross Profit = 12,00,000 × `25/100` = ₹ 3,00,000
Revenue from Operations = Cost of Goods Sold + Gross Profit
= ₹ ( 12,00,000 + 3,00,000)
= ₹ 15,00,000
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